The Business Court continued its slow Summer approach in August 2026, issuing only four Opinions.

I was thankful for that, as I did not need to open my laptop during the week I spent at the beach following Labor Day.

Continuing with past practice, I have divided the August 26 Opinions into two parts. This Newsletter covers two of them.

Now, you have to endure another pitch for being a paid subscriber. You are reading for free now. But that is not going to continue very much longer. Would you pay five dollars for a Newsletter containing summaries of only two Business Court Opinions? I wouldn’t. But by subscribing you will be getting three Newsletters a month containing summaries of almost every single Business Court Opinion and Order of Significance like thousands of you have been getting for months now That is well worth five dollars per month. Subscribe here:

Just Because you can File a Motion to Dismiss Doesn’t Mean That you Have To.

Chief Judge Conrad began his opinion in Davis v. McHatton, 2026 NCBC 72 (Conrad, CJ.) with these words:

This Court receives a steady diet of cases in which one member of an LLC claims that another has wrongfully usurped corporate control. This is such a case.

Op. ¶1.How true that is, especially from the perspective of someone who tries to write about nearly every Business Court decision. I have thought about assigning the many cases with repeating fact patterns particular numbers. Let’s call this case fact pattern number one.

I would add to that repeating fact pattern the filing of Motions to Dismiss that don’t have a prayer of succeeding. That was the case here.

Plaintiff Davis, the disgruntled LLC member had filed two claims against his co-member of the Defendant LLCs. One was for judicial dissolution and one was to have a receiver appointed to protect his rights.

The statute governing dissolution says that a member of an LLC may seek such a remedy when “it is not practicable to conduct the LLC’s business in conformance with the operating agreement and” governing statutes, N.C.G.S. § 57D-6-02(2)(i), or when “liquidation of the LLC is necessary to protect the rights and interests of the member,” id. § 57D-6-02(2)(ii). Op. ¶3

The Defendant argued that Plaintiff Davis had failed to allege facts adequate to show that it was not practicable to conduct the LLCs business under the operating agreements and relevant statutes. Chief Judge Conrad disagreed, observing that Plaintiff had alleged that Defendant McHatton had:

unilaterally changed the passwords for financial accounts,

increased his own compensation,

altered pricing for the companies’ services,

diverted the companies’ assets and staff to other business ventures.

had used company funds to pay for many of his personal expenses.

Op. ¶5.

If you are looking for allegations to support a claim for judicial dissolution that will survive a Motion to Dismiss, these provide a go-by. Chief Judge Conrad observed that these allegations compared “favorably with those held to be sufficient to state a claim for dissolution under section 57D-6-02(2)(i) in past cases” Op. ¶5.

The Defendant fared no better on his second argument in support of the Motion to Dismiss the judicial dissolution claim. Judge Conrad referred to this argument as “nonsensical.” Op. ¶6. It was that the Defendant intended to buy out the Paintiff’s interest in the LLC.

A buyout is indeed a means for avoiding judicial dissolution under G.S. 57D-6-03(d)(“in any proceeding brought by a member under clause (ii) of G.S. 57D-6-02(2) in which the court determines that dissolution is necessary, the court will not order dissolution if after the court's decision the LLC or one or more other members elect to purchase the ownership interest of the complaining member at its fair value in accordance with any procedures the court may provide. (2013-157, s. 2.))(emphasis added)

The nonsensical part of this argument was that defendant said that his intention to buy out the Plaintiff’s interests deprived the court of subject matter jurisdiction of the claim. Judge Conrad said “this argument sorely misunderstands the statute.” Op. ¶6. He went on to note the language of the statute stating that a purchase was required to proceed “in accordance with any procedures the court may provide.” and that the Court would obviously have “jurisdiction to ‘provide’ the ‘procedures’ for the purchase.” Op. ¶6.

The Motion to Dismiss the claim for a receivership was not “nonsensical” it was simply premature. Chief Judge Conrad observed that he had the power to appoint a receiver “to manage the business of the LLC pending the courts decision on dissolution and if dissolution is decreed by the court to wind up the LLC.” Op. ¶8 (quoting N.C.G.S. § 57D-6-04(a).he said that the Plaintiff had met the threshold pleading requirements for the appointment of a receiver. he rejected the argument that plaintiff was not likely to succeed on his claim for judicial dissolution and that it was rarely appropriate to appoint a receiver for solvent businesses like those involved in the case Op. ¶9.

This was a pointless Motion to Dismiss

Sometimes You Just Have To Make A Motion To Dismiss

if my previous post counsels against making a Motion to Dismiss just because you can, the Complaint in Leris v. De Leon, 2026 NCBC 73 (Conrad, CJ.) was crying out for a dispositive motion.

A hodgepodge of claims were made, for breach of contract, unjust enrichment, negligence and gross negligence, breach of fiduciary duty, fraud, punitive damages, and breach of the implied covenant of good faith and fair dealing.There were also claims for conversion and civil conspiracy. Op. ¶5. Chief Judge Conrad cut through and dismissed each of those claims with little discussion.

The deficient allegations in the Complaint stem from the business relationship between Plaintiff Leris and Defendant De Leon. The two parties were co-members of an LLC which provided tax and insurance services. Pllaintiff alleged that Defendant De Leon had been inappropriately taking money from the company by instructing clients to make payments to an account owned by the Defendant De Leon’s husband (another Defendant) rather than through the LLC’s usual point-of-sale system. The Defendant had allegedly paid $3000 from the LLC’s checking account for a personal expense without reimbursing the company.

The breach of contract claim..

The Business Court has observed several times that the hurdle for pleading a claim for breach of contract is a “low bar.” Op. ¶9. All you have to do is allege the existence of a valid contract and that the terms of that were breached. Id.

How could this Plaintiff trip over that low bar? Chief Judge Conrad said that:

the allegations are so vague that it is hard to describe the claim at all, other than to say that Sara supposedly breached undefined contractual obligations rooted in her employment and Company membership.

Op. ¶9. He dismissed the claim for breach of the implied covenant of good faith and fair dealing for the same reason. Id.

The Unjust Enrichment Claim.

Plaintiff’s unjust enrichment claim was doomed by her own self-defeating allegations. She asserted that the Defendant had “wrongfully, fraudulently, deceitfully and unlawfully took and/or diverted monies from the Plaintiff and the LLC. Chief Judge Conrad observed that the North Carolina Supreme Court had recently held that ““a taking and transferring of another’s property without permission is not a willing transfer” and therefore cannot support a claim for unjust enrichment.” Op. ¶10 (quoting Rel. Ins., Inc. v. Pilot Risk Mgmt. Consulting, LLC, 929 S.E.2d 893, 916 (N.C. 2026)).

The Breach of Fiduciary Duty Claim.

Plaintiff’s breach of fiduciary duty claim against the Defendant was based upon her belief that the defendant owed her a fiduciary duty in her roles as an employee and member of the LLC.. Anyone who follows the Business Court with any degree of seriousness knows that “settled law holds otherwise.” In [North Carolina], members of an LLC generally do not owe fiduciary duties to each other or to the LLC” Furthermore, it has long been established that “an employer-employee relationship is not a fiduciary one even when the employee has a different management authority, absent some allegation that the employee exercise dominance and control over his employer.”" Op. ¶11 (emphasis added) Plaintiff had not pointed to or alleged any facts to support an exception to these well-established default rules.

The Claim for Negligence and Gross Negligence.

The allegations of the Complaint asserted that the defendants had acted in an intentional manner. Since negligence based claims cannot be based upon intentional conduct, these claims were dismissed as well.

Fraud Claim.

It stands to reason that a plaintiff who could not jump over the low bar for pleading a breach of contract claim could not meet the particularity requirements of the fraud claim. The allegations that the defendant had made false representations that “she was interested in learning the tax insurance business” and that “she was interested in continuing to grow the business of the Company” were not “definite and specific” enough to support a fraud claim.. Furthermore, these alleged misrepresentations were promissory in nature, and plaintiff was required to allege facts from which a court and the jury might “reasonably infer that the defendant did not intend to carry out [the] representations when they were made.” Op. ¶13. They had not, and the broad-based claim was dismissed.

Conversion Claim.

The property that was the subject of the attempted conversion claim was money. Chief Judge Conrad observed that “in general, money may be the subject of an action for conversion ‘only when it is capable of being identified and described.’” Op. ¶14 (quoting Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 528 (2012) . Plaintiff had not sufficiently identified the allegedly converted sums. This claim was dismissed as well.

Punitive Damages and Civil Conspiracy Claims.

If you have been reading this Newsletter you know that there is no standalone claim for punitive damages. See Opinions Newsletter March 2026.That “claim” was dismissed. As for the claim for civil conspiracy, that was dismissed because none of the underlying claims had survived.

this complaint was dismissed in its entirety, with prejudice.